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Bowser Unveils New CRE Tax Plan To Build Affordable Housing

D.C.'s commercial real estate industry could soon be forced to make a larger contribution to the city's affordable housing efforts. 

Mayor Muriel Bowser at Monday's State of the District address

Mayor Muriel Bowser, in her State of the District speech Monday evening, said her proposed budget will include a 30% increase in the city's primary affordable housing fund, paid for by tapping into commercial property sales. 

"These have been and continue to be very good times for Washington, D.C. But in a city that works for both residents and businesses, in the coming fiscal year, we're asking our commercial property owners to share some of the upside," Bowser said. "With this budget, we will capture more from commercial real estate transactions and, therefore, be able to invest more in affordable housing."

Bowser told the Washington Post Monday she wants to increase the deed recordation and transfer taxes from 1.45% to 2.5% on commercial properties worth more than $2M. The increase, which could raise an estimated $79M next year, would need to be approved by the D.C. Council. 

The revenue would help D.C. increase its annual investment in the Housing Production Trust Fund from $100M to $130M. It also plans to increase the investment in the Housing Preservation Fund from $10M to $15M. Bowser also announced the creation of a $20M Workforce Housing Fund. 

The increased investment in the housing funds is part of Bowser's goal for D.C. to produce 36,000 new units, both market-rate and affordable, by 2025. D.C Department of Housing and Community Development Director Polly Donaldson will discuss the initiative Wednesday at Bisnow's D.C. Metro Affordable Housing Summit.

In her speech, Bowser also referenced the surge of appeals in recent years that have delayed and blocked a host of developments that could create thousands of new housing units.

"The hardest part of the housing crisis is that it is not totally within our control," Bowser said. "Right now, for example, 2,000 units of affordable housing are stuck in frivolous litigation." 

A rendering of the planned redevelopment of the RFK Stadium campus

Bowser also announced a new initiative to spur activity on one of the largest undeveloped pieces of land in D.C: the RFK Stadium campus. Federal rules have restricted the use of the 190-acre campus to sports and recreation, preventing housing and mixed-use development from occurring, but Bowser aims to change that.

She said Del. Eleanor Holmes Norton will introduce a bill to Congress in the coming days that would convey the RFK Stadium property to the District at market value. 

D.C. officials have reportedly been working with Daniel Snyder, owner of Washington's NFL team, to clear the way for a new stadium to be built for the team on the RFK site. But Bowser said that is not part of Holmes Norton's bill. 

"To be clear, there is no deal to bring a professional sports team to that site," Bowser said. "Whether a stadium or sports arena is included in the reimagined RFK campus is a debate for a future date, which we as a city must decide for ourselves."

The mayor also hopes to spur more development in Ward 7 and Ward 8. Bowser highlighted the $60M tax-increment financing package she proposed for Anacostia's Reunion Square development, and said the new federal opportunity zone program can help bring investment to underserved areas. 

"By implementing opportunity zones, we can grow our housing, jobs and amenities in areas of D.C. that have been too often overlooked," Bowser said. "That's why I established 18 out of our 25 opportunity zones in Wards 7 and 8." 

In addition to the new housing and development initiatives, Bowser unveiled new plans to improve the city's transportation infrastructure. She said her budget will include a $122M investment in a K Street Northwest Transit Way. 

Bowser did not mention plans to revive the planned extension of the D.C. Streetcar that had been envisioned to run along K Street to Georgetown, but her transit way proposal appears to include dedicated lanes for buses and bicycles. 

"The new infrastructure investment will ensure that buses, bikes and cars can safely share the road and move through Downtown D.C.," Bowser said. 

She also said she plans to remove the fees for the D.C. Circulator. The bus system, which provides connections between Rosslyn, Georgetown, Downtown D.C., Union Station and Anacostia, previously cost $1 per ride. She also reiterated her call to bring back late night Metro service, which WMATA cut in 2016 to help with its maintenance efforts. She criticized a proposal to subsidize Uber and Lyft rides in lieu of late night Metro service, saying it would further clog the roads. 

"We need a commitment from Metro that they will return to late-night hours and that they will not become a system that only caters to white-collar workers commuting from the suburbs," Bowser said.